U.S. stocks end Friday sharply higher on Bernanke, GDP

But markets are still down for the week

By

KristinaPeterson

DonnaKardos Yesalavich

JonathanCheng

NEW YORK (MarketWatch) -- U.S. stocks shot higher and rose steadily throughout the day to close the week on a high note, as investors scrambling for good news found reassurance in Federal Reserve Chairman Ben Bernanke's vow to do whatever it takes to revive the shaky economy.

Bernanke's comments provided few surprises but reassured Wall Street the central bank will act if "unexpected developments" cause the recovery to falter. His words were somewhat soothing to investors during a week packed with disappointing economic data, which was capped on Friday with another sluggish reading on second-quarter growth and a third-quarter revenue warning from technology bellwether Intel. See Bernanke talks tough on deflation.

The Dow Jones Industrial Average
DJIA, +0.33%
vaulted 165.14 points, or 1.65%, to finish at 10150.65. The blue-chip index slumped to below the psychologically important 10000 level on Thursday, which could have provided some motivation behind Friday's rally. For the week the Dow lost 0.62%.

"There's a perception here that things are better off than perhaps the market had priced," said Todd Colvin, vice president of MF Global. "That doesn't mean we're coming out of this any faster."

Mr. Bernanke's remarks helped to assuage nervous investors after the Commerce Department cut its estimate for U.S. GDP growth that again confirmed economic growth slowed to a crawl. Meanwhile, another report indicated consumer confidence in August continued to remain weak.

Investors were also able to move beyond some lackluster corporate news during the session. Intel
INTC, +0.56%
gained 1.1% even after warning that weakening consumer demand for computers will hurt sales during the third quarter. See Intel cuts sales view.

Boeing
BA, +0.81%
rose 3% to $63.04 after the airplane manufacturer again delayed production for its 787 Dreamliner jet.

Major global indexes also were able to rally. The Nasdaq Composite
COMP, +0.44%
gained 1.65% to 2153.63, while the Standard & Poor's
SPX, +0.22%
500-share index rose 1.66% to 1064.59. Investors noted that the 1040 level had provided support for the measure earlier in the session. Materials led the S&P 500's climb, while safer consumer staples lagged.

For the week the S&P 500 was down 0.66%, while the Nasdaq was off 1.18%.

U.S. indexes tracked a rally in European markets. The Stoxx Europe 600 index (SXXP) gained 0.6%, while London's FTSE 100 rose 0.9% and Frankfurt's DAX climbed 0.7%. %. See European Stocks close higher.

Investors pulled out of safe-haven Treasurys and embraced riskier commodities. The 10-year note fell, pushing its yield up to 2.64%. Crude-oil prices leaped above $75 a barrel. Gold futures also increased. See U.S. Treasurys slide after Bernanke.

Among stocks in focus, data-storage company 3Par
PAR, +1.71%
soared 25% as the bidding war for the company escalated. Hewlett-Packard
HPQ, +0.06%
raised its offer 11% above Dell's
DELL
bid made only hours before. H-P on Friday lifted its bid to $2 billion, or $30 a share, topping Dell's most recent offer of $27 made before the start of trading Friday. Shares of Dell increased 1.2%, while H-P shares slipped 0.6%, making it the only Dow component in the red. See H-P battle with Dell for 3Par intensifies.

Trades in Intel that triggered a five-minute halt in the stock shortly after the company's guidance cut were deemed erroneous and canceled, according to the New York Stock Exchange.

Retailer J. Crew
JCG
fell 7.2% after its fiscal second-quarter profit surged 88% as sales of full-priced items and tight inventory control helped improve margins, but the company issued a weak outlook for the current quarter and trimmed its full-year guidance.

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